What exactly is relationship marketing? Is it just another buzzword to add to our list of ever growing terms for how we justify new marketing efforts, marketing budget transition, and shift in strategy? According to Marketing-Jive – it did not make the 2010 top marketing buzzwords list. It was, however, on the top 100 buzzwords list for 2008. Is it a thing of the past? My belief, with the explosion of social media, is that relationship marketing is no longer the strategy, but rather the end goal.

Wikipedia defines relationship marketing as a mutually beneficial arrangement where both buyer and seller have an interest in providing a more satisfying exchange. In plain English, it goes beyond the goal of acquiring a new lead and turning that new lead into a customer. It refers to that long-term engagement between customer and brand that is more meaningful and creates a stronger bond between the two.

The core concept of this type of marketing is that it’s a mutually beneficial relationship, both from the perspective of the brand and its view of the customer, and from the customer’s perspective with regards to its loyalty to the brand. Another piece of the goal would be to build a relationship with a customer that their friends and family will envy, ultimately causing new relationships to be formed.

Let’s look at an example or two of mutually beneficial arrangements:

American Eagle’s All Access Pass: Both the customer and the brand feel the reward of being a part of the relationship. Rewards cards are a great example where the relationship becomes mutually beneficial. I purchase a pair of jeans at American Eagle and swipe my All Access Pass. AE benefits not only from the sale, but in getting to know me as a customer better by understanding my purchase patterns. I, in return, get postcards and email discounts on future purchases. This becomes a mutually beneficial customer-brand relationship. I, as the customer, am far more likely to return to AE with my discounts and not only continue to purchase from them, but to tell my friends about the good rewards I receive.

Macy’s: In my mind, Macy’s has one of the best examples of a mutually beneficial relationship through their in-store credit program. It seems like just about every month, they offer up discounts and coupons for their cardholders that are leaps and bounds above the already reduced pricing in the store. It gives the incentive to not only open a charge account with the brand, but to continue to use the card in order to receive the extra discounts. Macy’s wins in that the in-store card use is way up, and they can gather more analytics on their customers to deliver better campaigns, and the Macy’s customer feels like they are getting special treatment with the larger discounts for the continued patronage and a simple swipe of the card.

Auto Dealerships: Now this one get’s a bit tricky, but I must say… Now-a-days it seems the auto dealerships all beat each other up with this deal and that deal, leaving the consumer entirely confused and anxious about the whole car buying experience. I actually had a mutually beneficial relationship with a car dealership for quite a few years. It’s not enough for the dealership to throw in free oil changes, because there is more to a relationship than that. Back in the day, there was a small Ford dealership called Ev Lewis Ford in Honeoye Falls, NY. This dealership made it their goal to have a personal relationship with every customer who walked through their doors. Our family had purchased several cars from this dealership and referred several folks to them as well. It was more than just the car buying experience that was positive, it was their service department, their involvement in the community, and so much more. I knew when I dropped my car off that it would be taken care of, and I would not be taken advantage of. Unfortunately, the dealership has since closed, as the namesake has since passed. I just wish there were more dealerships out there like that.

Relationship marketing is not just about giving your customers incentive to buy with you, it’s about making them WANT to buy with you, as if you are the only logical choice for them. It’s about that relationship with your customer that makes them want to Tweet about their most recent experience, and tell all their friends on Facebook about those fabulous pink shoes they found at a great price!

I would further suggest that when that relationship is formed, we marketers should fully leverage the information our customers provide, from demographic info to purchase history and whatever other analytics we can draw. This will show us which relationships are lasting and which are not, and perhaps lend some insight in to how we can build even better relationships with our customers that will continue to last. If we could use predictive modeling based on our existing customer relationships to profile the perfect customer segments, we could deliver specialized incentives to various relationship groups.

Marketers and brand owners do need to get out of the mind-set that the end result is a single purchase conversion. With social media being as heavily used as it is, we cannot afford to build bad relationships with our customers. Let’s make our good relationships even better, and hope that our customers become willing to share their good experiences with their social networks.

One thing that bothers me a bit about the way we're defining "relationship marketing" in business today is actually centered around the loyalty programs like you mention here. A relationship is a subjective thing; there are elements to it that go beyond transaction value. And often I see businesses equating quid pro quo offers like this (you get a discount, we get data) with a "relationship".

I'd posit that a relationship has to have an intrinsic element that's qualitative, not quantitative - something a bit intangible that engenders my loyalty and interest in the business beyond just getting discounts or incentives. In fact, I'd say it's much closer to a true relationship if I'd stick with the business if the discounts and loyalty programs disappeared, and if I can cite reasons for wanting to do business with them in all of the moments OTHER than when I'm purchasing something.

Hi Wendy,
With our Boutique Apartment Management Business, we have combined Relationship Marketing and Partnership Marketing. We have partnered with Vitamin Water and Smart Water, as well as established an Urbane VIP Program and VIP Card with negotiated discounts at at select area merchants that are consistent with our brand demographics.

The point is, it is an excellent way to stretch your marketing dollars and provide additional, real value

I'm not sure if your list of "mutually beneficial arrangements" was meant to provide an exhaustive overview of relationship marketing. My understanding is that relationship marketing is a strategy, not just a program. It requires creating a learning relationships, identifying the right customers, differentiating them based on strategic value, interacting with them at the right moments and customizing offerings to their preferences (the IDIC model). Relationships in general require two way communication and trust as well. I wouldn't rely on Wikipedia for a proper business definition.

Kathy Babb

Well said. "Marketers and brand owners do need to get out of the mind-set that the end result is a single purchase conversion."

Social media has given us the tools to really connect with our audience, long-term, intimately, through good and bad experiences. Sort of like a family - every holiday dinner isn't like a Norman Rockwell painting! We have discussions, joyful moments, arguments, make-ups and yet we are still a committed family.

I am fascinated with how these 'social technologies' give data, and also voice to our customers and therefore, forge stronger relationships. Before, marketing was one way. Now we have more sensibility about what our customer is really thinking!

Amber - you make a great point. There are some brands I feel loyal to (or to be in relationship with) - even with or without discounts and special offers. I would 100% agree that it goes far beyond transaction value. With today's marketing technology, customer relationships could be defined by any number or, or combination of metrics.

As a mom, and thinking about my purchase patterns, there are some brands or products that I will purchase no matter what - because I do feel a sense of loyalty to those brands, because of the quality of product and most certainly not the price. What I would love to see happen there, is for those brands to seek me out and build on those relationships. Not necessarily with the end goal of my buying additional product, but rather becoming a part of their community, or expanding my reach of brand evangelism.

Eric - thanks for your comment. I'd love to hear more about how you intend to expand upon your customer relationships as they enroll in these programs. How else will you enhance the customer relationship to keep them engaged in the relationship?

Most certainly, the definition of relationship marketing is subjective and far more broad than Wikipedia's definition. I would respond to your comment that I view my relationships with my favorite brands in such a way that it most definitely is a mutually beneficial relationship. Those brands that I am in relationship with, take good care of me, and I in turn not only purchase from them, but extend the value of the relationship through evangelism, referrals and so on. If on of my favorite brands stopped their rewards program... I would continue to shop there because I am in relationship with the brand overall. Some of my favorite brands don't offer any discounts, but they communicate with me on environmental issues and other information that is important to me as a consumer. With that brand, it's not about the discounts at all.

You are right on point about communication with the right info, at the right time, through the right channels, to the right customers. Through marketing analytics - AND - established relationships, we can take this type of marketing to the next level, reducing perhaps the number of touch points with each customers, by increasing the effectiveness of our communications.

The rewards programs I mentioned are just one method of gathering useful insights about your customers, which through marketing analytics can offer up the information you need to then go out and offer up those personalized messages.

I'm glad you liked the article. Today we need to be of the mind-set that with all the two way communication going on - we must consider how we can provide more value to our customers and build on our relationships.

There has been some great dialog and debate about this article, which I always love. At the end of the day - any brand who is looking to go the distance, should be concerned about the relationships with their customers. Using marketing analytics through purchase patterns, loyalty programs, consumer touch-points (online, mobile, brick and mortar, etc.), social sentiment and more, we can begin to build personalized relationships with our customers that go far beyond the purchase.

I do feel this 2008 buzzword was said to be 'buzz' before it's time - and goes far beyond what even I can describe. Any brand who is in true relationship with their customers, in my mind, has got it goin' on!

Thanks again for your feedback.

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